TaxTMI 
TaxTMI 
2012 (9) TMI 252
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.... department carried out search and seizure operations over the Laskary Group on 06.08.08. During the period relevant to the assessment year 2007-08 there was no Trading Activity. The return of income for AY 2007-2008 declaring NIL income was filed 04-03-2009. During the year the assessee company purchased land admeasuring 1.80 hectare at Village Murlipura Thesil. Sanganer, Distt. Jaipur. The original owners of the land were Smt. Pushpa Kedia and Smt. Gulab Devi. Smt. Gulab Devi and Pushpa Kedia applied before JDA on 02.09.2004 for development of the residential scheme in the name "PUSHP GARDEN". The proceeding under section 90B of Rajasthan Land Revenue Act 1956 was completed on 02.02.2005 whereby the existing mutation in favor of Pushpa Kedia and Gulab Devi was cancelled and the mutation of the land was vested in favor of JDA. Copy of order of JDA dated 02.02.2005 is under seizure. (copy at PB Page 178 A to 179). However they could not get the scheme approved from JDA. The original owner of the land sold this land to Shri Sher Singh Sunda through "Agreement to Sale" and "Power of Attorney". The power of attorney of the land was executed on 21.09.2005 by Pushpa Kedia and Gulab D....
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....t PB Page 184 to 190. 4.1. During the course of search operations a paper marked as page 37 of exhibit Ann. A-57 was seized from 73-75 Talkatora, Jaipur. The contents of this paper are reproduced as follows: Column 1 Column 2 Column 3 Column 4 26.66 Bhavgarh 166 330 22.5 Push Garden 169 400 50 Mahal Rd 14.5 30 40 Dabla Khurd 70 120 60 Chaksu 88 200 60 Gunsi 60 200 45 Vatsalya 90 18.75 Sports City 120 80 R R Farm 108 440 666 18.30 The AO mentioned that Shri Pawan Laskary, the key person of the group has scribbled names of properties owned by the companies in Laskary group. For instance Bhavgarh Banda belongs to Countrywide Buildestate Pvt. Ltd, Pushp Garden belongs to Rising Buildestate Pvt. Ltd, Dabla Khurd belongs to Apple Buildestate Pvt. Ltd, RR Farm to P L Estates Pvt. Ltd and so and so forth. During the post search inquiry the statement of Pawan Laskary was recorded on 17/11/2008 and in response to question No. 10 on this paper, he stated that the figures were mentioned in column 4 of this paper by omitting two ze....
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....55 crores is 20% of Rs. 22.79 crores and that it was an estimate of joint venture. The AO after considering the explanation of the appellant and going through the documents, found this contention to be correct as mentioned in para 8 of the assessment order. 4.2. Earlier on 30/11/2010, the assessee was asked to explain why addition should not be made for unexplained investment in the land cost amounting to Rs. 4,55,88,400/- - Rs 1,50,91,403/- in light of the pages 159 of Ann. A-24 wherein Rs. 4,55,88,400/- was mentioned. Page no. 37 of Ann A 57 where against its property at Jagatpura, 400 is written in code was also just referred. Immediately after being served the notice, the assessee filed an affidavit dated 06/01/2010 stating that the contents of column 1 of page 37 of Ann A 57 was the share in joint venture, column 2 represents property name, column 3 represents estimated expenses further to be incurred and column 4 represents the market value of the land. The assessee stated that the contents of column 4 were indeed written in code by omitting five zeroes. 4.3. The AO mentioned that the market value of the land is Rs 22.79 crores and not 4.00 crores as stated by the asses....
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....in both papers of Bhavgarh Banda and Rising (Ann A 24), the revenue sharing is on 65-35% with an upfront payment of 20% of land value to owner. It is neither 26.66 nor 22.5 percentage and not round figures especially in the hands of a company. The AO held that the assessee has mentioned total cost of the land as on 31.03.2007 by omitting five zero in the column 4 of the seized paper page 37 of Exhibit 57 and thus the total cost of the land in the hands of the company is Rs. 4.00 crores as opposed to Rs. 1,38,33,389/- given in the balance sheet as on 31.03.2007 and the difference of Rs. 2,61,66,611/- was added as undisclosed investment in the land u/s 69B of Income Tax Act. The AO relied the decision of Mahavir Wollen Mills Vs CIT (Del) 245 ITR 297 (2000). 4.4. Assessee preferred appeal before Ld. CIT (A). Various grounds were taken. Assessee filed paper book containing 463 pages and detailed written submissions. Gist of written submissions have been reproduced in the order of Ld. CIT (A) at pages 6 to 36 which are elaborate written submissions against the order of assessment and citing various case laws. The written submissions incorporated by Ld. CIT (A) at pages 7 to 36....
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....h inquiry, the statement of Shri Pawan Lashkary was recorded by the DDIT(Inv) -III on the impugned seized paper (which the ld AO has reproduced at assessment order Page 3). Shri Pawan Lashkary could not correctly explain the contents of the seized paper at the time of search. Shri Pawan Lashkary made the statement ex-tempore and completely confused over this seized paper. The total under column 4 is 18.30 and the total land holding against the properties described in column 2 is about 173 bigha; this is the reason why Shri Pawan Lashkary confused and stated before the DDIT that the total area of the land is mentioned in column 4. Shri Pawan Lashkary could get the photocopy of the search statement on 4-1-2010 and after going through the statement, he realized his mistake and made his sworn statement in affidavit dated 6-1-2010 (PB page 60-62), which was filed before the AO on 02.12.2010. The relevant para in the affidavit as regard the above said search statement is as under: - "During the post search inquiry, the DDIT (Inv.)-III, Jaipur recorded my statement on 17.11.2008. The DDIT (Inv)-III Jaipur showed me a seized paper marked as page no 37 of Exhibit A-57 seized from ....
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....owner does not get the full market value of the land at the time of signing of the joint venture agreement but gets some part amount of the market value of the land which is commonly known as up-front price and major part against the sale consideration of the land is received in the form of built-up area in the constructed building. In a case where the builder/developer does not complete the construction within time for one or another reasons, the major stake of the land owner may ruin. Further the repossession of the land from the builder is matter of long litigation in courts. In such situation the land owner neither gets his consideration of the land from the builder nor did he can sale the land to another person. Due to all these risk factors, no land owner wants to fasten his hands with un-known builder or developer. Due to this reason the assessee quoted a very high price far above to the market price to the unknown builder who approached the director of the assessee company through a broker Mr Sharma by seeing advertisement in News Paper. The ld. AO further mentioned in the said para that as for column three, there are not any expenses in such land account on jamabandi....
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....nt venture project. However, this proposal could not be materialized because the builder did not find it viable/suitable considering the demand of the assessee of Rs. 4.55 crore against the land +35% share in built-up area. The proposal was not materialized this is sufficient to show that all the projections were only paper projections not based on real market rates and terms. 2.6 The seized document A-24 was not prepared by the assessee. This can be established merely by carefully seeing these papers. The projections were prepared considering the outgoing of Rs. 4.55 crores against the land and sale proceeds were estimated considering the builder's share of 65% in the built-up area. Therefore, there was sufficient material before the ld AO to ascertain beyond doubts that these seized papers were not prepared by the assessee but by the builder. 2.7 The seized paper page 37 of Annexure A-57 and page 159 to 161 of Annexure A-24 are independent and prepared at different point of the time and for the different proposal and different builder. There is no nexus in between the papers seized in these two Annexure. The papers in Annexure A-24 relates to projections prepared by the ....
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..... The entries in the relevant seized document were without any narration and the same being un-dated and unsigned, it was a dumb document incapable of leading to any interpretation. The said document is not sufficient to draw any adverse inference against the assessee and there being no proof to show that the amount of Rs. 2,61,66,611/-was actually paid by the assessee company, in addition to what has been disclosed in the regular books of account and the addition of the said amount made by the AO under s. 69B was not justified. b) The learned AO presumed that this slip (Page 37 of Annexure A-57) was prepared on or before 31.03.2007. On the basis of this presumption she took the so called actual cost of the land at 4.00 crores as on 31.03.2007 and deducted the amount appearing in the balance sheet against the cost of the said land as on 31.03.2007 to arrive the figure of addition u/s 69B of the Act. The cost appearing in the balance sheet after 31.03.2007 was not allowed to be reduced). There is no basis of such presumption. 2.10 The assessment was going to be time barred on 31.12.2010. Up to 11.12.2010 the AO was of opinion that the actual cost of the land was Rs. 4,55,88....
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....ribution of land for the joint venture/collaboration, if the joint venture/collaboration is materialized. Rs. 4,55,88,400.00 against the land does not denote the actual investment in the land by the assessee but estimated market value of the land offered for the purpose of joint venture. The seized paper is projection. This may be seen from the following facts:- At the top of this paper it is mentioned that "Assuming all flats are sold within 6 months". Projection is made for 12 months. a) Building cost has been shown equal starting from 4th month to 12 month. b) Marketing cost shown equal starting from 1st month to 6th month and 7th Month to 12 month. c) Administrative cost shown equal from 1st month to 12 month. d) The land is vacant till today and no any construction work was carried out so far. This fact may be verified by making spot inquiries. b) So far as page 37 of exhibit 57 seized from 73-75, Talkatora, Jaipur this is to submit that Shri Pawan Lashkary has filed affidavit explaining the contents of the said seized paper. The photocopy of the said affidavit is enclosed herewith for your ready reference. Shri Pawan Lashkary has explained this seiz....
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....y that our capital account should be credited by this amount against the capital contribution of land for the joint venture/collaboration, if the joint venture/collaboration is materialized. The figure is written in short at the time of negotiation by omitting five zero. 4. All the noting in column 1, 3 and 4 of the said seized papers are just rough estimates noted during the course of discussion/negotiation with the prospective party for joint venture/ collaboration agreement. The joint venture/ collaboration/ partnership agreement was not materialized till the date in respect of the lands mentioned at Column No 2 of the said seized page." Thus, all the noting in column 1, 3 and 4 of the said seized papers are just rough estimates noted during the course of discussion/negotiation with the prospective party for joint venture/ collaboration agreement wherein the amount of "400" noted in column 4 is against the estimated market value of the land offered by assessee under negotiation for joint venture/collaboration to some other prospective party for credit in its account, if the joint venture/collaboration is materialized. The figure is written in short at the time of negotiati....
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.... registration Rs. 1,35,00,000/-. e) The impugned seized paper page 159 of Exhibit A-24 was not written or prepared by the assessee group/ their family members or employees. This paper was prepared by the representative of the prospective party came here for discussion. f) The page no 159 of Annexure A-24 is of such a nature that no conclusion except projection can be derived out of it. It is a dumb paper. No Date is mentioned and it cannot be linked with any period or year. The name of assessee or particulars of land or project are not mentioned over it. It is not written in the hand writing of the directors or employees of the assessee. In view of above detailed submission and evidence, we submit that there is no undisclosed investment/expenditure by the assessee in this land and there is no evidence or material to visualize that the assessee made on and over expenses/investment on this land which have recorded in books of accounts." 2.11 The ld. AO again issued notice dated 06.12.2010 asking the assessee to explain why Rs. 4.55 crore should not be considered as unexplained expenditure in the said land. Copy of the notice is at PB Page 72. This shows that the AO was co....
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....made by the representative of the prospective party to estimate the profit/loss from joint venture in its hands. We are enclosing herewith excel sheet of Page 159 for the shake of convenience. Since these papers are noting but only the projections of joint venture which could not be materialized, therefore no adverse interference can be drawn on the basis of these papers. As regard figure of Rs. 7,41,39,600/- mentioned in your above referred query, we are submitting assessee's explanation in separate reply filed in the case of M/s Country Wide Build Estate Private Limited. As regard page 37 of Exhibit A-57 (seized from 73-75 Tal Katora, Jaipur), we would like to mention here that this page was prepared at different point of time at the time of negotiation with some other party and some figures/notings were written on this paper during the discussion with some other party and figure mentioned in column no 4 represents to amount offered for credit in assessee's capital account against the land contribution by the assessee (or say upfront price); if the joint venture/collaboration is made on the sharing basis mentioned in column no. 1. The upfront price and sharing rat....
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.... the prospective developer/builder against the land under joint venture project. It cannot be said in any way that this represents the cost of the land. In fact, having regard to the contents of the said document and the manner and method in which the same was written, it is not possible to connect the same with any actual transaction entered into by the assessee company and no inference, therefore, could be drawn on the basis of the said document, much less any inference about the unexplained investment incurred by the assessee as alleged by the Ld AO. 2.13 The assessee has explained the contents of seized paper 37 of annexure A-57 by filing sworn affidavit of Shri Pawan Lashkary-author of the paper The copy of the said affidavit is placed at PB Page 60 to 62. The relevant para of the affidavit is as under: - "he explanation of entries noted on this page is that we did not have sufficient funds, skills and experience to develop group housing scheme/projects independently. So, we advertised in news paper for sale of land approved/under approval for group housing/projects. The advertisement cutting of the news paper is also under seizure vide page 102 to 106 of Exhibit A-24....
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.... discussion/negotiation with the prospective party for joint venture/ collaboration agreement. The joint venture/ collaboration/ partnership agreement was not materialized till the date in respect of the lands mentioned at Column No 2 of the said seized page." 2.15 It is relevant to mention here that Shri Pawan Lashkary has stated in his affidavit that column 4 of the seized page 37 of Annexure A-57 shows the market value of the land to be credited in his account of joint venture. The relevant sentence in the affidavit is as under: - " We offered the prospective party that our capital account should be credited by this amount against the capital contribution of land for the joint venture/collaboration, if the joint venture/collaboration is materialized. The figure is written in short at the time of negotiation by omitting five zero." This para was further explained by the assessee vide letter dated 11.12.2010 the relevant para of the letter was as under: - " As regard page 37 of Exhibit A-57 (seized from 73-75 Tal Katora, Jaipur), we would like to mention here that this page was prepared at different point of time at the time of negotiation with some other party and som....
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....at the upfront price and sharing ratio depends on several factors such as reputation of developer, nature and quality of development work to be carried out by the developer, involvement of investment by developer, expected profit from the share received by the owner in the built up area, period of completion of project, size of project, expected FAR from JDA, expected availability of height etc. Thus, the upfront price and sharing ratio may vary person to person and project to project. i) As regard 26.66 mentioned in column 1 of page 37 of annexure A-57 for Bhavgarh scheme we submit that at the time of negotiation the proceedings under section 90B was pending. The land in question was purchased by agreement to sale on 18.11.2006 from SC/ST class and the status of land was agriculture. Therefore it was proposed that 20% share should be given to Shri Pawan Lashkary against his working for 90B proceedings, land conversion matter, approval of plan by JDA and looking after day to day construction activities of the proposed project. Balance 80% will be divided among the builder and land owner in the ratio of 2/3:1/3 respectively. According to this offer, the assessee company would get....
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....xcept minor investment in construction of WBM roads, plantation of trees on road side etc. and in advertisement and selling. In normal course, the booking commission in the property transaction is about 1% to 2%. Therefore, in such type of the projects where the quantum of investment by the developer is very low, it is profitable for the developer to work on sharing basis of 20% and in such type of projects no land owner would like to give 60% or 70% to the developer otherwise it would be loss for the land owner. 2.18 The learned AO rejected the affidavit filed by Shri Pawan Lashkary on surmises, conjectures, assumption, probabilities and possibilities without having any positive material to rebut or controvert the contents of the affidavit. No evidence was brought on record by the ld AO to show that the contents of the affidavit are incorrect. Shri Pawan Lashkary presented himself before the AO (PB Page 77) after filing the affidavit but the statement of Shri Pawan Lashkary were not recorded by the AO to controvert the contents of the affidavit. The contents of affidavits, which are not vague should be accepted correct. Reliance is placed on the following decisions:- (i) Meh....
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.... of the assessee. The assessing officer merely disbelieved the explanation/statements given by the assessee and has converted good proof into no proof. Hon'ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC); 120 observed that the Income Tax Department cannot by merely rejecting unreasonably a good explanation, convert good "proof into no proof" Hon'ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof. Hon'ble Punjab & Haryana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P & H) also held that suspicion, howsoever strong cannot take the place of legal proof. l) This paper does not reflect the investment made by the assessee company. If the department considers it as investment of the Assessee for the land, it is burden on the department to prove the figures appearing on the paper found in the search represents undisclosed investment of the Assessee. This burden is not discharged and therefore, on the basis of this paper no addition can be made.....
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....09 (SC) has held as under:- Search and seizure-Presumption under s. 132(4A)-Applicability to regular assessment- Presumption under sub-s. (4A) of s. 132 is a rebuttable presumption-Further, presumption under sub-s. (4A) is available only in regard to proceedings for search and seizure and not for the purpose of framing a regular assessment-Unlike s. 132(4), it has not provided that the presumption under s. 132(4A) would be available while framing the regular assessment or for that matter in any other proceedings under the Act except under s. 278D-Sec. 132 being a complete code in itself cannot intrude into any other provision of the Act and vice versa-Though presumption under s. 132(4A) is not available to the authorities while framing the regular assessment. 2.24 The surrounding circumstances and capability to earn the undisclosed income should be taken into account before making addition u/s 69 of Income Tax Act. The assessee company was incorporated on 29.06.2005. In AY 2006-2007 and AY 2007-2008, there was no any trading operations. The company was not capable to earn undisclosed income to make undisclosed investment in the land. Therefore, without having any business ....
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....d paper. Reliance is placed on the following decisions. 1) Commissioner of Income Tax Vs. S.M. Aggarwal (2007) 293 ITR 43 (Del) In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of Rs. 22.5 lacs on interest and earned interest income of Rs. 3.55 lacs on it. The Tribunal hold this document as dumb document. The relevant findings of the Tribunal as mentioned in the above order is as under:- "We have ourselves examined the contents of the document and are unable to draw any clear and positive conclusion on the basis of figures noted on it. The letters 'H.S.', 'T.2' and 'D-Shop' cannot be explained and no material has been collected to explain the same. Likewise, the figures too are totally unexplained and on the basis of notings and jottings, it cannot be said that these are the transactions carried out by the assessee for advancing money or for taking money. Thus, in our opinion, this is a dumb document." Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under:- "12. It is well settled that the only per....
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....of the entry in the seized book with any transaction carried by the assessee in his capacity as Director or by his wife or M/s I.G. Builders and Promoters Ltd. to show the amount in figure as assessable undisclosed income. No proper use of seized material was made to establish that entries in the seized document relates to undisclosed income of Rs. 48 lakhs. Seized document has rightly been held to be a dump-document. It was for the Revenue to put life into it by collecting other relevant and connected material. This has not been done to establish the case as per requirement of the statute." Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under:- "13. Similarly, the document Annex. A-37 recovered during the course of search in the present case is a dumb document and lead us nowhere. Thus, the Tribunal rightly deleted the addition of Rs. 48 lakhs made by the AO on account of undisclosed income on the basis of seized material." 3) JAYANTI LAL PATEL vs. ASSISTANT COMMISSIONER OF INCOME TAX & ORS. (1998) 233 ITR 588 (Raj) During search at the residence of Dr. Tomar, the Department official found a slip containing some figures. This ....
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....ereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties-The four essential components of s. 4, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in the case. 6) RAKESH GOYAL vs. ASSISTANT COMMISSIONER OF INCOME TAX (2004) 87 TTJ (Del) 151 The findings of Hon'ble Tribunal was as under:- "20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the CIT(A) has not been controverted by the learned Departmental Representative by filing any positive evidence. The copies of the pages found from the possession of the assessee are placed in the paper book and after going through these papers, we find that these are simply deaf and dumb documents and they cannot be considered for making any addition. This is a settled principle of law that any document or entry recorded in those documents should be corroborated with positive evidence. Here in the pr....
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....may not be in that person's control and possession. For proving possession it is necessary to show that the person concerned had the intentio possessendi. In this case nothing of that sort is pointed out by the authorities below. Then, for presuming that the contents of the books of account or document are true, the document must be speaking one. In this case the slip said to have been recovered by the Revenue, does not contain any narration in respect of the various figures noted therein. The slip does not indicate whether the figures referred to quantities of money or to quantities of goods and whether one side, and if so, which side represents receipts which side represented outgoings. Thus, is, thus, a dumb document and as the orders of the authorities below would show they have merely added the total of the right side of the slip without supplying the figures any language to indicate their meanings. In the case of such a dumb document, the provisions of s. 132(4A) do not permit anyone to presume that the total of the figures of right side of the slip represents the assessee's income. The presumption at the most is attracted to the figures and a further presumption that they re....
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....h the Authorised Representative that these were working sheets maintained by the employee and those transactions maturing, have been duly recorded in the books of account. The CIT(A) has taken a clear-cut view that the AO did not verify these so-called balances with the parties whose names were found mentioned. Therefore, he deleted the additions. Further the transactions appeared in the diary marked 'PKC-60' do not reveal that they are partywise account as there is no mention of any bill having been raised against the said transactions. The amounts mentioned therein appeared to be a consolidated figure but date on which these amounts are shown as outstanding is not mentioned. In both the years there are only one instance of payment received appears but the date and mode of receipt are not mentioned. The AO has also noted that cheques received as per this diary are duly recorded in the books of account. These accounts cannot be treated as reliable and properly maintained for another reason also. The next year's accounts give no indication regarding movement of amount. The parties show drastic reduction in the balances but how the payments were accounted for is not forthcoming from ....
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.... of the assessee is to be rejected in toto no addition can be made since in that case those papers would be dumb papers-If the statement is accepted in toto, then the borrowings mentioned in the papers have to be accepted as genuine-In either case no addition can be made. 12) M.M. Financiers (P) Ltd.. vs. Deputy Commissioner of Income-tax ITAT, CHENNAI 'B' BENCH (2007) 107 TTJ (Chennai) 2000. Held that no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land. 13) Hissaria Bros Vs ACIT (ITA No. 179/JDPR/1998) 22 Taxworld 684 ITAT Jaipur. It was held that addition cannot be made on the basis of vague figures found noted on seized loose paper without proving that the alleged amount are receipts and income of the assessee. 14) ITO Vs Mannalal Jhalani (ITA No. 250 TO 260/JP/1998) 22 Taxworld 551 ITAT Jaipur. It was held that addition cannot be made simply recovery of some papers found and seized during the course of search without making necessary verification and examination. ....
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....out a typo and make it the pillar of their arguments. Perhaps that is necessary for somebody like the assessee and his A R who have a very thin ground to stand on. Hence, it becomes essential that irrelevant facts are highlighted and misrepresented before the appellate authority in an otherwise foolproof case. On misrepresentation, consider this: the assessee company was given a specific show cause vide order sheet entry dated 13.12.2010 which he has not brought on record before the CIT (A). Pray why? Because it does not suit them and the magnificent edifice of lies they have built. Consider how the assessee's stand regarding page 37 of Ann A 57 changes with time. In 2008, just after the search the assessee stated that the amounts are written by omitting two zeroes. The last figure of 1830 (i.e. the total of column 4), the assessee has claimed that it is the total land of the group in sq mtrs. Also the figures written against each plot, i.e. column 3 is the expenditure for taking possession of the said plot. The figures in column 1 are written by omitting three zeroes and it is the rate at which land was purchased per bigha or market value of land per bigha. In December....
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....he Ld AR in his rejoinder submitted as under:- 4.1 The Ld AO has not bring any new facts or evidence in support of her contention and has repeated the findings made in the assessment order. The facts and submissions and case laws cited in the written submission of the assessee has not been controverted by any positive evidence. 4.2. At the outset we mentioned that the undersigned AR is well aware with his ethic and professionalism and duties. Nothing has been mentioned in the written submission which is against the professional ethics and professionalism. We did nothing but brought the correct facts and law before the Appellate Authority, which we feel our professional duties towards the clients. Further the ld. AO mentioned that the assessee and his AR are telling lie but the same not based on any material and the same is personal opinion of the AO because there is nothing on record to prove that the contents of affidavit and submission filed before AO as well as before the CIT (A) are wrong and false. 4.3. For other matters in the remand report we have submitted detailed rejoinder in the case of M/s Countrywide Buildstates Private Limited which is reproduced as under:- ....
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....AO regarding this paper does not have any basis. d) In the same para the ld. AO mentioned that the assessee failed to furnish the evidence to prove that the said paper shows that entries into a supposed joint venture with some unknown party. In fact this seized paper is a rough noting and the assessee has explained each and every entry and since the deal was not finalized, no evidence in support of the entries can be furnished. The onus under section 69 is on the AO to prove the investment. Therefore, here the onus was on the ld AO to prove by positive evidence that the assessee has mentioned cost of the properties in column 4 of the seized paper and the assessee's explanation is wrong. In the case of the assessee, the Ld AO has not brought any document or material to prove that the cost is mentioned in column 4 of the seized paper. The onus of the ld AO cannot stand discharged merely rejecting the explanation of the assessee. The ld AO had vast statutory power to make inquiries from the seller of the land or from other persons but instead of making any inquiry or bringing any positive evidence against the assessee, she rejected the explanation of the assessee merely on surmi....
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.... asking price and not the market price from some totally unknown prospective buyer. In this regard we submit that this price is written in reply of an e-mail of a proposal (PB Page 35) which shows that the same is asking price not a market price. Had this mean a market price or a favourable proposal from the buyer's side, than this deal would have been finalized. Since the deal was not finalized on this rate, this is sufficient to show that this was an asking price. The asking price always differ from market price and the vary party to party, time to time, place to place. Further if it is presumed that this is market price of land still it does not matter in the case of the assessee because in the case of assessee the issue is regarding Up-front price to be received in case of joint venture and the same cannot be remain same in each case. The price and sharing ratio depends on several factors such as reputation of developer, nature and quality of development work to be carried out by the developer, involvement of investment by developer, expected profit from the share received by the owned in built up area, period of completion of project, size of project, expected FAR from JDA,....
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....icer and filed before him was taken into consideration and then Ld. CIT (A) arrived at a conclusion that the addition made by Assessing Officer was without any basis. Accordingly entire addition made by Assessing Officer was deleted by Ld. CIT (A). 5. The Ld. D/R firstly placed reliance on the order of Assessing Officer. Portion of the order of Assessing Officer was also read by Ld. CIT D/R. Attention of the Bench was drawn on seized paper found during the course of search on which the addition was made. Attention of the Bench was drawn on page 37 on second item of seized paper. Thereafter, attention of the Bench was drawn on pages 32 to 35 of the paper book in case of other assessee i.e. M/s. Country Wide Build Estate Pvt. Ltd. as facts in this case are similar to the facts in case of assessee. It was further submitted that the Assessing Officer has considered each and every column of seized paper and then only has arrived at the conclusion that the figure of 100 mentioned in column no. 4 of seized paper is nothing but the cost price paid by assessee to the seller of this land. The five figures have been omitted by the assessee while preparing this paper and if five figures ....
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.... paper book filed by the AR of the assessee, assessment order, remand report, the material available on record and cases citied by both the parties. On perusal of assessment order, I find that the AO has finally made the addition of Rs. 2,61,66,611/- by applying the provisions of section 69B of Income Tax Act. From the assessment order, I find that the AO has made the addition on the basis of noting available on the seized page 37 of Exhibit A-57, seized from 73-74, Talkatora Jaipur. The AO has also referred another seized papers page 142 and 159 to 161 of Annexure A-24 (Pushp Garden)/page 73-76 of Annexure A-40 (Bhavgarh) seized from 73-74 to support her view that the market value of the properties is not mentioned over the seized Page 37 of Exhibit A-57. The AO further mentioned that the Shri Pawan Lashkary has made incorrect statement in the post search inquiry, wherein he stated that area of the land is mentioned under column 4 of the Page 37 of Exhibit A-57. The AO mentioned that Sh. Pawan Lashkary has filed sworn affidavit during the course of the assessment proceedings explaining the contents of the above referred seized paper wherein he explained that the market value of....
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....te for joint venture purpose. The seized paper 159 to 161 of Annexure A-24 and Page 73-76 of Annexure A-40 is the projection for the joint venture for Pushp Garden and Bhavgarh scheme respectively prepared by some developer and apparently given to Sh. Lashkary as proposal for discussion. On page 161 of Annexure A-24 working for land area, built up area, cost of land, cost of building, marketing expenses, administrative expenses etc are estimated/ projected for joint venture. At bottom of the page 20% is mentioned against cost % to be paid upfront to owner. The total land area is taken 17534 sq yards and land cost is taken Rs. 13000/- per Sq yards and total cost of the land is taken Rs. 22,79,42,000/-on this seized paper. On page 160 of the seized Annexure A-24 projection is made for inputs, costings and revenues. On page 159 of the seized Annexure A-24 projection was made for Fund Flow assuming all the flats are sold within 6 months. In this paper land expenses are taken Rs. 4,55,88,400/- as outflows of fund in 1st Month of 1st year. Rs. 4,55,88,400 is exactly 20% of Rs. 22,79,42,000/- . Therefore, the figure Rs. 22,79,42,000/- is full value of the land estimated for joint venture ....
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....se, which cannot be full value of the land in joint venture cases. It is common practice of the trade that the land owner is paid part amount of the value of the land in cheque/cash and balance against the land value is payable by sharing the construction area in between the developer and land owner. 5.5 Without prejudice to above, it may be mentioned that in fact, out of various papers referred by the A.O. in the assessment order, earlier the A.O. has mainly relied on page no. 159 of Ann. A-24, wherein as per the A.O., the land expenses of Rs. 455,88,400/- is mentioned and the A.O. has given show cause letter dated 30.11.2010 to the appellant that the document Ann. A-24/159 is part of the Pushp Garden Group Housing Scheme and land expense are written as Rs. 4,55,88,400/- In the light of above, assessee was required to show cause why should not differential amount i.e Rs. 4,55,88,400/- - Rs. 1,50,91,463/- (i.e the recorded amount) be added back as undisclosed expenditure for the year. Even in the subsequent show cause notice dated 6.12.2010, the A.O. has again asked the appellant to explain as to why should not Rs. 4,55,88,400/- be considered as unexplained expenditure in land a....
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....which is as under:- "As regard page 37 of Exhibit A-57 (seized from 73-75 Tal Katora, Jaipur), we would like to mention here that this page was prepared at different point of time at the time of negotiation with some other party and some figures/notings were written on this paper during the discussion with some other party and figure mentioned in column no 4 represents to amount offered for credit in assessee's capital account against the land contribution by the assessee (or say upfront price); if the joint venture/collaboration is made on the sharing basis mentioned in column no. 1. The upfront price and sharing ratio depends on several factors such as reputation of developer, nature and quality of development work to be carried out by the developer, involvement of investment by developer, expected profit from the share received by the owner in the built up area, period of completion of project, size of project, expected FAR from JDA, expected availability of height etc. Thus, the upfront price and sharing ratio may vary person to person and project to project." 5.7 Therefore, the figure '400' mentioned in the column 4 of the seized paper 37 of Annexure A-57 should be read ....
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.... correlation or justification or the basis for the same, after just merely rejecting the explanation of these entries given by appellant. 5.9 I agree with the argument of the ld. A.R that for making addition u/s 69 B, the onus is on the department to prove positively that the appellant has made unaccounted investment and this onus cannot be discharged merely by rejecting the explanation given by the appellant. Such addition to be made u/s 69 B is contradistinct from the claim of the deduction or allowance made by the assessee wherein the addition can be made if the evidence so furnished or explanation so given by the appellant is found to be lacking or incorrect/rejectable. In the case of addition u/s 69, the A.O. has to bring positive material to establish unaccounted investment/payment. In the instant case, no positive material could be brought out on record to establish that the impugned seized page in column no. 4 reflects the actual cost of the properties named in column no. 3. 5.10 The AO has relied on the decision of Delhi High Court in the case of Mahavir Woolen Mills Vs CIT (Del) 245 ITR 297 (2000). In this case part of the entries mentioned in the seized pape....